Washington Initiatives

Rep. Charles Norwood, the Georgia Republican, has introduced legislation that would amend the Employment Retirement Income Security Act in a way that would benefit employers but spell bad news for plans.

The Responsibility in Managed Care Act closes a loophole in ERISA, which has shielded health plans from medical malpractice lawsuits. We've seen that proposal before — it's contained in Norwood's bill that would regulate consumer protection in managed care, the Patient Access to Responsible Care Act. What's new? The ERISA amendment specifically exempts employers from liability and also prevents insurance companies from going after employers to recoup costs for malpractice litigation.

Employers had been hesitant to support PARCA without a safe harbor from malpractice suits. "We're going to hold insurance companies, not employers, responsible for medical decisions — such as withholding treatment — that often lead to the horror stories we see on television," said Norwood spokesman John Stone.

Expect Long And Loud Debate Over Protections

The chairman of the House subcommittee on employer-employee relations, Illinois Republican Rep. Harris Fawell, promises to hold hearings on consumer protections in managed care soon — and there's no shortage of bills in the hopper.

Tops on the agenda will be Norwood's PARCA; legislation expected to be introduced by the Republican leadership, based on the Health Care Bill of Rights and Freedoms that was announced in December by Texas Sen. Phil Gramm, chairman of the health care subcommittee, and the Clinton administration's yet-to-be seen consumer bill of rights. The Clinton bill — which will follow recommendations put forth by a presidential advisory commission — is expected to contain provisions and protections that the administration cannot implement through executive action.

Expect considerable managed care-bashing throughout the spring as supporters from the various camps hold hearings and "town meetings" to point out inadequacies in the system. Leaders on both sides of the aisle see managed care reform as a "hot button" issue that will resonate with voters in November. Barring a high-profile health care catastrophe, though, don't expect a floor vote on any of these measures until shortly before the 1998 elections. Most likely bet: passage of a watered-down version of PARCA, which has wide support — more than 90 House co-sponsors are already on board from both parties.

The HMO community remains divided. Any measure that improves quality in managed care plays into the hands of established plans, which view higher standards as a way of putting the financial squeeze on newer, leaner managed care organizations. Some older plans are forced to sacrifice quality to compete with younger organizations on price. That's why some HMOs are willing to accept the disclosure provisions in the Norwood bill, which mandates that plans inform customers "in plain English" what is and isn't covered under their plans.

Democrats Ready To Turn Their Guns On Medicare Fraud

Medicare, the quintessential Democratic entitlement program, is now under heavy attack for fraud, waste and abuse — from Democrats. Leading the search-and-destroy mission is Sen. Harry Reid of Nevada, chairman of the party's policy committee.

"We're going to make Medicare fraud a top priority on the Senate agenda this year," Reid said, citing an instance in which Medicare was billed $400 for physical therapy. The "therapy" amounted to teaching an elderly man how to use a walker.

Accusing Republicans of trying to "covertly" destroy the Great Society program, Reid said he wants to divert money saved by ferreting out fraud to other programs that benefit the elderly, a popular idea with older constituents.

Look for the Department of Health and Human Services to announce "National Senior Waste Patrol" demonstration programs that will train nurses and accountants to work with the elderly to identify and eliminate fraud. Thirteen states already have similar programs in place.

Useful Links

Managed Care's Prospects in the Health Reform Era

Princeton’s Uwe Reinhardt, PhD, renowned health care economist, sits down with Managing Editor Frank Diamond to discuss the economic effects of the Affordable Care Act, wellness programs, and the state of health care in the United States in general.